In its bid to maintain its lead over rivals like Honda Cars India and Hyundai Motor India, which have of late come out with new small cars and have some more in the pipeline, market leader Maruti Suzuki India plans to launch a completely new premium hatchback within the next two years.

Due for launch in 2015-16, Marutis new premium small car code named YRA will be produced both in India and in Hungary for the European market. It is likely to be sold under an entirely new brand positioned above its existing premium hatchbacks Swift and Ritz. Incidentally, the Ritz will also see a facelift (2015), while the Swift will first see a facelift (2014) and then a full model change (2017).

Though Maruti is the undisputed leader in the small car segment with a 48% market share, industry sources said it needs to guard its turf as both Honda and Hyundai are coming with new launches a refurbished Jazz and i20, respectively by next year.

Strengthening small car portfolios is today the focus of most mass segment carmakers since small cars have about a 54% share in the 27-lakh-unit domestic passenger vehicle volumes.

Maruti currently has seven brands in this segment including the popular WagonR, Alto and Swift.

"Maruti is developing a new model in order to expand its premium hatchback range to tackle the fresh competition coming from nearly all rivals. Also, what works in its favour is that premium hatchbacks like the Swift have been doing well because owners of cars like the Alto are upgrading to the next level, a source said.

A second source in the auto supplier industry confirmed the development. The new YRA model could fit somewhere between the Swift and the Ritz, but the company may also position it above the Swift. It will definitely offer a diesel engine option as well. Development is in the advanced stages both in Japan (parent Suzuki Motor) and in India, the person said.

When contacted, a Maruti Suzuki spokesperson said, We will not comment on product plans.

Maruti Suzuki, one of the earliest international carmakers to enter India in 1984, today has an over 40% market share of the overall market and has been able to weather the slowdown of the last two years better than competitors because of its wide range of products, vast distribution network spanning rural India and its value-for-money proposition. In April-September, Maruti's domestic volumes were up 3% at 4.86 lakh units, even though total total sales in the passenger vehicle industry were down 5.15% at 12.01 lakh units.

The company, which recently started a third production line at its Manesar plant outside Delhi, taking its total installed capacity across Manesar and Gurgaon to around 15 lakh units annually, is making investments of about Rs 2,500 crore in a new R&D centre at Rohtak in Haryana, and of over Rs 10,000 crore on a new mega production facility at Gujarat spread over five to six years.

"Maruti Suzuki has always been successful creating sub-segment in the segments, so it will be interesting to see how it positions this vehicle in the domestic market. The competition is already intense between Maruti and Hyundai and it will intensify as Hyundai shift its core focus to the domestic market and tries to protect its dominance, said Gaurav Vangaal, automotive analyst for light vehicle forecasting at IHS.

Rivals are fast shoring up their small car portfolios. Recently, the countrys second largest carmaker Hyundai launched the Grand i10, the fifth small car in its line-up, targeting Marutis Swift. Honda, which has the Brio hatch, is also expanding its presence in the key area of the Indian car market, with plans afoot to set up a third plant focused on a new small car model competing with entry-level models like Marutis Alto and Hyundais Eon. Ford India is also expected to launch more small car models, while Nissan will relaunch its Datsun sub-brand with the Go next year.